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Industry deterioration continues
February 5, 2001 |Estimated reading time: 1 minute
Industry deterioration continues
Based on the electronic equipment order data from the US Dept of Commerce Factory Orders report (dated 2/2/01) as well as the previous week's PCB data, analyst Walt Custer says a slowdown is quite obvious. Following are his comments:
The first chart, illustrating the North American rigid PCB book/bill ratio on 3-month and 1-month bases, shows that the 1-month value was 0.85 for December.
Note the rigid PCB bookings and shipments for 1/99 through 12/00 (second chart). This is a statistical sampling, but note the substantial drop in $ bookings in recent months. The inflated/double orders of early 2000 were corrected late in the year. I expect this trend to continue for at least the first third of 2001.
The third chart is a summary of 12-month (current annual) and 3-month (most recent 3 months vs. same 3 months in 1999) orders for key components of the electronics food chain. Note the dramatic slowdown in communications equipment orders. Communications equipment was the "darling" of early- to mid-2000, but it has now tanked. Computer & Office (probably not PCs but rather mainframes, etc.) and Measurement & Control (factory automation, test equipment, etc.) are keeping total orders up. Since much of the Measurement & Control went into semiconductor fabs, I expect this section to slow soon. The high interest rates (with a typical lagging effect on capital investment) will also hit this category.
The fourth chart shows PCB vs. total electronic equipment growth on a 3/12 (3-month growth) basis: both are tanking. Since PCBs have now dropped below equipment, they have "overcorrected." Watch this chart carefully. It will give us the first signs of a recovery.
Visit Custer Consulting Group's website at http://www.custerconsulting.com/